Intercontinental Trading v. Catabijan
REITERATIONFacts
The Antecedents: St. Mary's Publishing Corporation (St. Mary's Publishing) is the copyright owner of certain textbooks. It entered into a business venture with M.Y. Intercontinental Trading Corporation (M.Y. Intercontinental) and Tedwin T. Uy (Uy) for the printing of its books in China. A financing agreement was executed for printing costs, with St. Mary's Publishing issuing purchase orders and authorities to print. St. Mary's Publishing defaulted on its payments, leading to bounced checks and the execution of several settlement agreements, including a Declaration of Pledge and Undertaking, and a Memorandum of Agreement. Sometime in April 2010, Jerry Vicente S. Catabijan, President of St. Mary's Publishing, allegedly executed a Deed of Assignment of copyright to Uy, which M.Y. Intercontinental later registered. St. Mary's Publishing discovered M.Y. Intercontinental selling the subject textbooks and filed a complaint for copyright infringement. Procedural History: The Regional Trial Court (RTC) initially ruled in a declaratory relief case that M.Y. Intercontinental was an unpaid seller with a right to resell the textbooks. However, in the copyright infringement case, the RTC found the Deed of Assignment to be forged, declared M.Y. Intercontinental's copyright registration void, and ordered the defendants to pay damages. The Court of Appeals (CA) affirmed the RTC's decision. The RTC also dismissed M.Y. Intercontinental's compulsory counterclaim for non-payment of docket fees. The Petition: Petitioners (M.Y. Intercontinental, Uy, and Allianz Marketing and Publishing Corporation) assailed the CA's decision, arguing that M.Y. Intercontinental held a valid copyright registration, that the declaratory relief ruling should have been binding, and that the award of damages was baseless. They also contended that their counterclaim for unpaid obligations should have been resolved.
Issue(s)
Whether the Deed of Assignment is genuine and valid. Whether the declaratory relief ruling is binding in the infringement case. Whether the trial court correctly awarded damages. Whether the counterclaim of petitioners should have been resolved in the infringement case.
Ruling
The Petition is PARTIALLY GRANTED. The Court of Appeals' decision is AFFIRMED WITH MODIFICATIONS. The Intellectual Property Office is directed to CANCEL Copyright Registration Nos. A2012-24 to A2012-35. The case is REMANDED to the Regional Trial Court of Manila, Branch 24 to determine the propriety of the compulsory counterclaims raised by the petitioners.
Ratio Decidendi
On the validity of the Deed of Assignment: The Court affirmed the findings of the lower courts that the Deed of Assignment was forged. The trial judge personally examined the signatures and found significant differences. The findings of the Quezon City Police District Crime Laboratory and the National Bureau of Investigation corroborated this conclusion. A forged signature means there was no consent, rendering the contract of assignment fictitious and void ab initio. Consequently, St. Mary's Publishing's copyright was not transferred to M.Y. Intercontinental, making the subsequent copyright registrations void. On the binding effect of the declaratory relief ruling: The Court found that petitioners misled the Court by presenting the declaratory relief ruling as final and executory. Records showed that the CA had reversed the RTC's ruling in the declaratory relief case, holding that declaratory relief was not available due to an existing breach and that M.Y. Intercontinental had other adequate remedies. Therefore, the declaratory relief ruling did not preclude the infringement case. On the award of damages: The Court found the award of damages proper. While petitioners argued that they did not forge the deed, the Court applied the presumption that the party who used and benefited from a forged instrument is its material author, especially when no evidence rebutted this presumption. The award of actual damages (in lieu of actual damages, pegged at 20% of total sales), moral damages, exemplary damages, and attorney's fees was deemed just and reasonable given the bad faith and the scope of the infringement. On the compulsory counterclaim: The Court found that the Court of Appeals erred in sustaining the trial court's refusal to grant petitioners' compulsory counterclaim. The claims for unpaid loan obligations and purchase order amounts arose from the same transaction that was the subject of the infringement case. Such counterclaims are compulsory and should not have been dismissed for failure to pay docket fees, as docket fees are not required for compulsory counterclaims. The case was remanded to the RTC to determine the merits of these counterclaims.
Main Doctrine
A forged Deed of Assignment does not confer rights to the assignee for lack of consent of the copyright owner. Registration of copyright does not vest ownership, but serves as notice, and its prima facie proof of validity and ownership can be rebutted by contrary evidence, such as forgery. Unauthorized importing, marketing, and selling of books constitute copyright infringement.